south-south trade

South-South Trade - trade between developing countries LIDCs & EDCs (previously referred to as the 'Global South'). 

  • The proportion of world trade between developing countries has nearly doubled in the last decade

  • It is a vital driver of economic growth for many emerging and developing countries, allowing them access to global markets that were previously out of reach. 

  • Total value of S-S trade was US$5.5 trillion in 2019

  • Accounted for 50% of the total of China and 60% of India's total trade in 2013. 

  • Much of this growth is driven by five key countries - The BRICS - Brazil, Russia, India, China & South Africa 

reasons for growth

  • rising demand in fast-growing China and India for raw materials and energy to fuel development 

  • the vast size of the potential customer market in Asia and Latin America

  • increasing demand from growing middle class in China, India, Brazil 

  • intra-regional trade between emerging nations and their neighbours 

  • growth in FDI, especially from China and India into other developing countries 

  • MNCs constantly aiming to reduce costs of labour 

some countries continue to be held back by factors such as -

  • ow productive capacity 

  • limited economic diversification - reliance on unprocessed primary products rather than manufacturing or providing services

  • the fluctuations in value of primary products 

  • limited infrastructure - road/rail/port infrastructure 

  • poor governance 

  • being landlocked 

growth of service industry

trade in commercial services has increased more rapidly than merchandise, in 2013 value of world merchandise exports grew by 2%, commercial services grew by 6%. 

Europe was the highest exporter in 2019 with 47.*% of the share but its share has been dropping in recent years, 

The growth of travel services to new tourist destinations in LIDCs/EDCs has fueled this growth. 

Economic growth in the BRICS has led to significant growth in the commercial services sector in these countries (banking ,finance, insurance etc) 

new international division of labor (NIDL)

The global reorganization of production in the last 40 years. 

MNCs moving their manufacturing jobs from ACs to EDCs/LIDCs. 

High paid managerial jobs and R&D remaining in Headquarters in Europe/North America. 

Fueled by the much lower labor costs and weaker environmental regulation in EDCs/LIDCs, 

Facilitated by the improvements in transport and technology that allow companies to be ran easily with bases all over the world.